SHANGHAI, Dec. 12 (SMM) – According to the latest data from China Customs, China’s exports of finished steel were 4.2 million mt during November, up 9.9% MoM, and up 44.3% YoY. Exports of finished steel were 1.23 million mt, up 30,000 mt or 2.5% MoM, but down 4.3% YoY.
China’s exports of finished steel in November were up 380,000 mt from October, which was related to weak steel prices in domestic markets, since steady declines in domestic steel prices allowed Chinese steel products to enjoy stronger price advantage and bigger profit margins in international markets. In addition, the surprising expectations of RMB depreciation in November also helped boost exports of finished steel. As foreign demand for steel products remains weak amid a global economic slowdown and ongoing European debt crisis, Steelease predicts China’s exports of finished steel will fall in December.
First, a slowdown of global economic growth will cause the growth of overall global demand for steel products to fall. The growth of manufacturing sectors in euro zone and South Korea, major destinations of China’s steel exports, continued to drop. The manufacturing PMI in euro zone and South Korea in November was 46.4% and 47.1%, respectively, with the PMI being lower than 50% for four consecutive months. Therefore, the contracting manufacturing sectors will further erode demand for steel products.
Second, although the Chinese currency RMB fell to the low end of its daily trading against the US dollar for several consecutive trading days from late November to early December, Steelease believes China’s economic growth is still faster or more stable than that in other economies, and the RMB will continue to appreciate in the medium and long term.
Third, China’s domestic steel prices have stabilized, but steel export prices from member of Commonwealth of Independent States (CIS) fell significantly recently, further eroding the advantage of Chinese steel products.
In summary, Steelease predicts China’s exports of finished steel will fall slightly in December.